Tag Archives: Inequality

The US economy has been expanding wildly for two centuries. Are we witnessing the end of growth? Economist Robert Gordon lays out 4 reasons US growth may be slowing, detailing factors like epidemic debt and growing inequality, which could move the US into a period of stasis we can’t innovate our way out of. Be sure to watch the opposing viewpoint from Erik Brynjolfsson.

Robert J. Gordon is among the most influential macroeconomists in the world. And the big picture he sees is not altogether rosy. Full bio »

Everyone loves equality: equality of races, of ethnic groups, of sexual orientations, and so on. The problem is, however, that in geopolitics equality usually does not work very well. For centuries Europe had a rough equality between major states that is often referred to as the balance-of-power system. And that led to frequent wars. East Asia, by contrast, from the 14th to the early 19th centuries, had its relations ordered by a tribute system in which China was roughly dominant. The result, according to political scientist David C. Kang of the University of Southern California, was a generally more peaceful climate in Asia than in Europe.

The fact is that domination of one sort or another, tyrannical or not, has a better chance of preventing the outbreak of war than a system in which no one is really in charge; where no one is the top dog, so to speak. That is why Columbia University’s Kenneth Waltz, arguably America’s pre-eminent realist, says that the opposite of “anarchy” is not stability, but “hierarchy.”

Hierarchy eviscerates equality; hierarchy implies that some are frankly “more equal” than others, and it is this formal inequality — where someone, or some state or group, has more authority and power than others — that prevents chaos. For it is inequality itself that often creates the conditions for peace.

Government is the most common form of hierarchy. It is a government that monopolizes the use of violence in a given geographical space, thereby preventing anarchy. To quote Thomas Hobbes, the 17th century English philosopher, only where it is possible to punish the wicked can right and wrong have any practical meaning, and that requires “some coercive power.”

The collapse of regimes like Hosni Mubarak’s in Egypt, which many considered “an exemplar of…durable authoritarianism” was a salient reminder to many that such revolutions are “inherently unpredictable.” Before long some began to speculate that the protest movements might spread to authoritarian states outside the Arab world, including China. Indeed, the Chinese government was among those that feared the unrest would spread to China because, as one observer noted, China faced the same kind of “social and political tensions caused by rising inequality, injustice, and corruption” that plagued much of the Arab world on the eve of the uprisings.

In an audacious State of the Union address Tuesday, President Barack
Obama made sweeping proposals to reduce poverty, revive the middle class
and increase taxes on the “well off.” While careful to not declare it outright, an emboldened second-term president laid out an agenda that could be called a “war on inequality.”

“There are communities in this country where no matter how hard you
work, it is virtually impossible to get ahead,” Obama declared in a
blunt attack one a core conservative credo. “And that’s why we need to
build new ladders of opportunity into the middle class for all who are
willing to climb them.”

If there is a war on inequality, then that must mean Obama wants everyone to be equal. The effect of this is punishment of success and subsidization of failure. Of course, we know the rule: Whatever you punish you will get less of, and whatever you subsidize you will get more of. The push for equality doesn’t make the country a better place. It makes it a worse place as we all become equally miserable.

Take ObamaCare for example. California doesn’t have enough doctors, so everybody is going to have to wait, or the standards are going lowered for healthcare providers . In the past it was the unsuccessful who waited or accepted lower quality care. Now it is the successful being punished too. ObamaCare is punishment for the successful in order to subsidize the unsuccessful. Also, now the unsuccessful have less of an incentive to improve their own lives because there is less pain for stupid decisions.

Xi’s language was unusually direct for a top leader, indicating his seriousness about the problem, but his speech gave few indications of how the party could better police itself, said Jean-Pierre Cabestan, a political scientist at Hong Kong Baptist University.

“He used strong words. It was clearly a warning: ‘We have to do something about this,'” Cabestan said. “Clearly, for him, the crux of the matter is corruption. The trouble is, of course, that he doesn’t tell us much about what are going to be the efficient tools or weapons he will put together to fight corruption.”

Corruption and extreme inequality of wealth between regions are two important factors concerning China today according to Chinese leaders. However, there is a problem. Even if the leaders fix these problems somehow, it probably won’t matter all that much.

We know from my prior analysis of collapse models that the number one factor affecting societies is time. When a relatively rigid system like China’s communist party takes over, the clock immediately starts counting down to collapse. This collapse is built into the system. The countdown is for about 70 years. Since the communists took over in 1949, that would mean 70 years later brings us to 2019. Obviously, a collapse doesn’t have to happen at exactly 70 years, but one can see that thoughts of revolution are already entering the minds of a lot of people. It’s going to be difficult to shake that.

At last, an explanation for Wall Street’s disgrace, Bernard Madoff’s Ponzi scheme and other high-society crimes and misdemeanors: A new study published in the Proceedings of that National Academy of Sciences found that wealthier people were more apt to behave unethically than those who had less money.

Scientists at the University of California at Berkeley analyzed a person’s rank in society (measured by wealth, occupational prestige and education) and found that those who were richer were more likely to cheat, lie and break the law than those who were poorer.

“We found that it is much more prevalent for people in the higher ranks of society to see greed and self-interest … as good pursuits,” said Paul Piff, lead author of the study and a doctoral candidate at Berkeley. “This resonates with a lot of current events these days.”

…

“This has some pretty clear implications,” said Piff. “Inequality is very much on Americans’ minds, and the potential effects of severe inequality on individual levels of behavior are major.”

All outcome for an individual or nation can be no better or worse than any other.

If an outcome is found to be better, then they must have cheated.

If an outcome is found to be worse, then they must have been victimized.

The amount a victim lashes out is directly proportional to the victimization.

It is the successful group or cheater group who is doing the victimizing.

Conservative:

Good behavior leads to a better outcome.

Bad behavior leads to a worse outcome.

Although the study applies only to individuals, the same must be true with successful countries, cultures and civilizations. The successful – the rich – got that way by cheating. Or at least that’s what liberals have always known. Now they have a study to back it up.

… the tyranny of big government is far worse than the sins of free men.

…

By late 1917, the Bolsheviks overthrew the provisional government in Petrograd (St. Petersburg) and plunged Russia into a three-year civil war. The Bolsheviks’ efforts were not just military. As noted in “The Rise and Fall of the Soviet Union,” “The Bolsheviks were also fighting a political and social war to convince the people of Russia that socialism was the best system for them.”

For centuries, Russia was ruled by a czarist autocracy (not to be confused with the Obama administration). At the turn of the 20th century, the vast majority of Russians — more than 90 percent by some accounts — lived as nothing more than peasants, while the Russian elites and nobles lived in extravagant luxury. Such inequality highly motivated the revolutionaries and quickly made them quite popular.

The Occupy Wall Street movement that inspired the London protest is hailed by the New York Times and the Financial Times as a wake-up call about inequality. President Obama hears an echo of the “frustrations of ordinary Americans”. The police have so far negotiated with the London demonstrators in good spirit, and even the Almighty himself seemed to be smiling on them when his duty representative at St Paul’s this weekend – canon chancellor Giles Fraser – showed level-headed respect by insisting the cathedral did not need special protection. Things could still sour, as they already have in Rome, but right now this seems like a movement that has struck a chord.

In modern societies today, there is a heavy degree of socialism. The more socialism there is then the more problems are smoothed over. This is equivalent of putting more firefighters on the job of putting out forest fires. The more firefighters you have, then the better job they can do putting out fires. But this has the perverse affect of crashing the entire forest that much sooner.

So making everyone equal will just cause the kind of financial crisis we are now experiencing a lot more often.

The real solution to our economic problems is automatic debt release every 7 years. This is the equivalent of controlled burns.

Add
to this the uprisings against kleptocracies in Egypt and Tunisia, the
street protests in Greece and Spain earlier this year, and you are
looking at a fresh political awakening. The specific contexts may seem
very different, ranging from authoritarian China to democratic America
(where Warren Buffett, the world’s richest man, publicly denounced a
“billionaire-friendly Congress” last fortnight). And the grievances may
be diversely phrased. But public anger derives from the same source:
extreme and seemingly insurmountable inequality.